You are probably running Mobi Desktop 6.1 or 6.2. You need to uninstall it, and install 6.0, which is fully compatible with the Kindle. (Mobipocket removed this compatibility in 6.1.)
I have a copy hosted somewhere. This should be it:
http://mason.gmu.edu/~nhoffeld/Mobipocket6.zip
P.S. Desktop 6.0 will put the ebooks in the correct folder, identify your kindle's PID, and also make julienne fries.